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Noble Foods Inc. v. Woodland Partners, Inc.

United States District Court, D. Massachusetts

July 8, 2019

NOBLE FOODS INC., d/b/a HAPPY EGG CO., Plaintiff,
v.
WOODLAND PARTNERS, INC., Defendant.

          ORDER ON MOTION TO DISMISS (DOC. NO. 8)

          LEO T. SOROKIN UNITED STATES DISTRICT JUDGE.

         Noble Foods Inc. (“Noble Foods”) has sued Woodland Partners, Inc. (“Woodland”) for breach of a contract involving the sale of eggs. Noble Foods alleges that it did not receive payment for multiple shipments of eggs to Woodland because of an email hack which convinced Woodland to deposit the money into a different bank account. Noble Foods now seeks to recover the money it would have received for those shipments of eggs. Woodland filed a motion to dismiss, which Noble Foods opposed. For the reasons set forth below, the motion to dismiss, Doc. No. 8, is ALLOWED IN PART and DENIED IN PART.

         I. FACTS

         The facts are drawn from the allegations in the complaint, in accordance with the standard applicable to motions to dismiss.

         Noble Foods is a nationwide supplier of organic and free-range eggs. Doc. No. 1 ¶ 5. In early 2017, Woodland began purchasing eggs from Noble Foods for distribution in supermarkets. Id. ¶ 6. At the commencement of the parties' relationship, Woodland required Noble Foods to enter into an ACH Agreement which governed the payment system to be used for Woodland to purchase the eggs from Noble Foods. Id. The ACH Agreement specifies a bank account belonging to Noble Foods and authorizes Woodland to make deposits into that account for payment of invoices. Id. ¶ 10. The bank account specified is a Rabobank account in California. Id. Additionally, the ACH Agreement states that it will remain in effect until written notice of termination is provided and that Noble Foods shall provide such information “in the format requested by [Woodland].” Id. ¶ 12. Finally, the ACH Agreement contains a blank box which had to be checked if and when Noble Foods requested a change under the agreement, including the bank account used. Id. ¶ 13. From January 2017 until March 2018, Woodland paid all invoices to Noble Foods' Rabobank account. Id. ¶ 14.

         On March 9, 2018, a Woodland employee, Michelle Hassan, received an email from “what appeared to be the e-mail account of Paul Mensing, a Noble Foods Senior Revenue Deductions Analyst.” Id. ¶ 15. The email stated that the bank account Noble Foods had been using had “been placed on hold due to a dud check” and purported to attach Noble Foods' “newly updated company bank account info for receiving payments via ACH.” Id. Three days later, Ms. Hassan responded to the email noting that the bank account information had not actually been attached and asked for Noble Foods to complete a new ACH Agreement, which she attached to her email. Id. ¶ 16.

         The same day, Ms. Hassan received a response in the form of a letter which provided new ACH instructions, rather than a completed version of the ACH Agreement she had sent. Id. ¶¶ 17-18. These new instructions directed Woodland to make all future payments into a Suntrust Bank in Florida. Id. ¶ 18. Additionally, Noble Foods' address was printed incorrectly on this letter; most notably, the address listed the city as “Francisco, ” rather than “San Francisco.” Id. At least one additional typographical error appeared in the letter and the letter was not personally addressed or signed. Id. Woodland neither required Noble Foods to complete a new ACH Agreement nor followed up with a telephone call to determine whether the requested bank account change was in fact authorized. Id. ¶ 19.

         Thereafter, between March 14, 2018 and May 22, 2018, Woodland made nine payments totaling $972, 521.35 into the Suntrust Bank account. Id. ¶ 20. “Noble Foods discovered the fraud after contacting Woodland about its delinquent account.” Id. ¶ 21. To date, Woodland has not paid Noble Foods any of the $972, 521.35. Id. ¶ 23.

         Noble Foods brought a three-count complaint alleging breach of contract (Count I), negligence in the performance of the contract (Count II), and unjust enrichment (Count III). Woodland moved to dismiss all three counts for failure to state a claim. Doc. No. 8. Noble Foods opposed. Doc. No. 17. The Court heard arguments from the parties on June 27, 2019.

         II. LEGAL STANDARD

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual allegations to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In evaluating a complaint, the court must accept all factual allegations in the complaint as true and construe all reasonable inferences in the plaintiff's favor. Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). A complaint must be dismissed for failure to state a claim when it lacks “factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.” Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997).

         III. DISCUSSION

         A. FBI Affidavit

         Woodland asks the Court to consider an affidavit submitted in a related forfeiture action by an FBI agent who is involved in the ongoing investigation into the hack of Noble Foods' system. Doc. No. 9 at 3 n.1. Noble Foods objects to the Court's consideration of the FBI affidavit on the motion to dismiss. Doc. No. 17 at 5. Accordingly, the ...


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